Supply chain management is the plan, freight forwarders are executors
Supply chain solutions of industrial units, doing manufacturing or packaging, always deal with the question of on-time delivery of raw materials required to finish a product and make it ready for delivery to such parties as importers, wholesalers, retailers, distributors and ultimately, consumers.
The officials of concerned organisations, in conjunction with professionals working for logistics companies, do the planning of supply-chain management. The physical movement of the goods and services is done by logistics companies that include consolidators, freight forwarders or cargo agents or mainline shipping and airlines companies all working in tandem in different phases of the distribution and delivery chain according to the established international business practices.
Freight forwarding companies are members of international global organisations like International Federation of Freight Forwarders' Association (FIATA), International Air Transport Association (IATA), South Asian Federation of Accountants' Freight Forwarder's Association (SAFAA) etc. Therefore, their credibility and very existence depend on carrying on their work in compliance with certain norms that are very much international in nature. That is only to be expected since the world of global business is international and depends on best practice in transactions, inter exchange of documents and money. These transactions need to be honest and beyond reproach.
The main concern for any economy is to increase "core investment" which includes investment in manufacturing and industrialisation in all sectors including information technology and all export oriented sectors. Such investment would be more forthcoming if investing companies see auxiliary sectors like logistics maintaining the highest and most technologically advanced standards and service.
To that effect, companies like Maersk, Expeditors, ABX Logistics, APL and other companies have taken steps to offer world-class service to the local shippers. Buyers like JC Penny, Target, Wal-Mart etc., depend on the ultra modern technology deployed by foreign freight forwarding companies like EDI, e.doc, bar-coding & scanning, RFID etc. The buyers are the source of all the foreign exchange that the nation receives from ready-made garments (RMG) industry. The network and offices that the foreign logistics companies have are global in nature and cannot be matched by any locally owned freight forwarding companies and nor will the local companies be able to spend twenty to thirty million takas in technology. Therefore, it is important that foreign logistics companies maintain their world-class service based operations which will help the local economy in offering potential foreign investors a world-class logistics apparatus in Bangladesh.
Our main objective vis-a-vis foreign investment remains as such acquiring increased foreign direct investment (FDI) in core sectors of manufacturing, and other industry-based, and also service, sectors like tourism and related sub-sectors. The infrastructure in transportation starting from congested seaport, airport and railways network, the slow service in internal container depots (ICDs) etc., is very poor. All remain detrimental to growth in business and trade.
In that scenario, we need more investment in logistics where any company, local or foreign, can be encouraged to enter the local market, provided that they show that their standard of automation and technological preparedness is world class. We should encourage the freight forwarding companies to work as solution providers mitigating the ill-effects that the lack of infrastructure may have on the import and export trade. These logistics companies, if treated well, can work as front men dedicated to working for increasing foreign investment in Bangladesh. Their international parent organisations can go to the door of buyers and sellers, convincing them to do business with Bangladesh. The more trade Bangladesh does, the more revenue these companies will earn. The upshot of such a possibility of freight forwarding companies working to encourage foreigners to trade with Bangladesh happens to be two-fold. These companies will ensure that physical movement of goods takes place safely with the help of world-class automation like tracking, and electronic devices that ensure quick solutions. This service will help convince foreign investors of the high standard of logistical apparatus available in Bangladesh. That can be only good for the local economy. Logistics companies' benefit if trade increases and Bangladesh will benefit in so much more ways: increased interest, increased investment and increased foreign exchange for the country.
Exporters and logistics companies have experienced a chequered relationship that has seen even more than the usual ups and downs in the last few months. That is an unfortunate by-play of the largely two-way cooperation between the two important components of our trade and business world. Freight forwarding companies help the exporters by getting them the best rates from various shipping and airlines and other services used while delivering a cargo. The charges accrued are also largely transparent because of the global nature of the freight forwarding companies and the accountability they have that comes from being members of certified international bodies. The work being done by logistics companies help deliver precious import and export cargo to the destination. The rates being paid by exporters and importers to the freight forwarding companies translate into revenue to the national exchequer via taxes.
The exporters are always concerned about the rates and charges being asked for by freight forwarding companies. This concern is justified and also expected because the less the charges are, the less would be the expenditure of the exporters/importers and hopefully the price of goods would also be a tad less. However, the charges being asked by freight forwarding companies are based on calculations that are transparent and are maintained worldwide. Local charges need to be fare and are deemed to be so. The business cycles are plagued by many factors and high freight forwarding cost is not considered very high in the list of factors that hurt trade. Rather high oil prices in the international market, poor infrastructure or political disturbances seem to be the factors quoted as damaging to trade.
There are some bad apples amongst the logistics fraternity. However, the number of such companies remains quite few. And their existence is a matter for the law enforcing agencies and supervisory authorities. The sooner the authorities act and take these companies to book, the better would be the level of cooperation between businessmen and logistics companies.